How to Form an LLC in Idaho

Fact checked for accuracy by Billie Anne Grigg, a bookkeeper and Mastery Level Certified Profit First Professional.

If you’re an entrepreneur looking to create a new business and complete all the requirements, you’ve come to the right place. Maybe you’re still a bit lost about all of the steps you need to take to get your LLC on its feet. This article will help guide you on how to get your business established in just a few simple steps.

What is an LLC? Good question. An LLC is a way to structure a business legally. It combines the limited liability that corporations have with the flexibility and lack of formalities that partnerships or sole proprietorships have. Additionally, an LLC passes through taxation so you can save money in the long run. 

If you’re an upcoming business owner who wants to limit your liability for debt and lawsuits, then an LLC is the way to go. Keep reading to learn how to create an LLC in Idaho without spending extra money on an attorney.

Step 1: Name Your LLC

The first and arguably the most crucial step is naming your LLC. This step sounds simple, but you have to confirm that the name of your business complies with Idaho LLC naming requirements. It should be memorable and straightforward enough for clients to search it easily.

The name must include LLC, or limited liability company, somewhere in the title. You can also use LLC, limited co., Ltd. liability company, and other abbreviations, such as L.L.C. You can’t include words that might confuse your company with a government agency. Restricted words may require additional information or a licensed individual to register.

Confirm that the name wasn’t already used by searching it in the name database on the state of Idaho website. In the same vein, you could consider a URL, or web domain, for your website and establish a business phone service. If you’re adamant about securing a unique name, you can reserve a name for up to four months by filling out a Reservation of Legal Entity Name form.

Remember that you don’t have to use your business LLC name while operating in the real world and can make an assumed or fictitious business name. A DBA (doing business as) is your trade name that makes recognizing your business easier. You would have to complete the Certificate of Assumed Business Name, and to file the DBA request is $25 online or $45 by mail.

Step 2: Choose A Registered Idaho Agent

You must nominate a registered Idaho agent when establishing your LLC. What does this mean? A registered agent is an individual or business entity responsible for receiving important legal documents on your LLC’s behalf. For example, if your business faces a lawsuit. A registered agent is the point of contact with the state, in this case, Idaho. They must be an Idaho resident and have a street address. 

You can select an employee within the company or yourself. A registered agent must be at least eighteen years old. When opting to make yourself the registered agent, the only downside is the loss of privacy, seeing that your information, such as your address and name, will become a public record.

Can you change your registered agent after starting your LLC? Yes, you can. You can file a Statement of Change of Registered Agent to the Secretary of State’s office. This form is free online, but you have to pay $20 to send it manually.

Step 3: File the Idaho LLC Certificate of Organization

A Certificate of Organization is the official document that creates your limited liability company. You can file this form with the Secretary of State online, in person, or by mail.

The Certificate of Organization should include the following:

• Your business LLC name
• The street and mailing address of your LLC’s main office
• The address and name of your LLC’s registered agent
• The mailing address for future correspondence
• The LLC organizer’s signature or whoever submits the Certificate of Organization
• Contact information, like your phone number and email address

Additionally, the Certificate of Organization must have the name and address of one governor. A governor is another term for a manager in a manager-managed LLC or a member in a member-managed LLC. What’s the difference? 

A member-managed LLC has members or owners that handle the daily operations, while a manager-managed LLC has members choose a manager or several to run the business. They then have the authority to enter contracts, hire and fire employees, and open bank accounts.

Step 4: Draft an Idaho LLC Operating Agreement

While an operating agreement isn’t required for LLCs, it’s still good to have one. What is an operating agreement? This document legally outlines the ownership and operating procedures of your LLC.

With an operating agreement, you ensure that all the business owners are on the same page, reducing the risk of later conflict. An operating agreement describes how your company will run. Additionally, this document highlights the rights and responsibilities of the members or managers. An operating agreement also verifies that the LLC is a separate business entity. 

An operating agreement shows how much each member invested, how you intend to distribute your LLC’s profits and losses, and voting procedures. If your LLC doesn’t work, an operating agreement elaborates what you plan to do afterward.

An operating agreement is flexible, and you can include almost anything, as long as it doesn’t violate Idaho law. Here’s a quick list of some examples you can write about:

• Investments
• Profits and losses
• Distributions
• Voting rights and decision-making
• Transfer of interest
• Dissolution

Your LLC could be subject to generic state rules that might not be applicable but detrimental in a potential lawsuit without an operating agreement. Additionally, your members’ liability protection might diminish. They might not understand their roles and responsibilities, leading to disputes down the road that will cost your LLC money and time. An operating agreement ensures your LLC will run smoothly with little issue. 

Step 5: Get an EIN

An EIN or an employer identification number contains nine digits, and the Internal Revenue Service (IRS) assigns your LLC one upon creation. This number helps the IRS identify your LLC for tax purposes, similar to a social security number. 

You might see an EIN referred to as a Federal Employer Identification Number or a FEIN. An EIN is crucial, allowing you to open a business bank account, help file and manage state taxes, and hire employees. You can obtain an EIN online or through the mail for free. 

Cost to Start an LLC in Idaho

To file a Certificate of Organization is $100 online or $120 by mail or in person. That’s the base rate. However, the fee can fluctuate depending on what forms you need to fill out and how you go about filing and sending the documentation.

What To Do After Forming Your LLC in Idaho

This section will elaborate on the next steps you should take after forming your LLC in Idaho. It’s important to separate your personal and business assets. For example, your home and car are at risk under the circumstance that someone sues your LLC without properly distinguishing them apart.

Open a Business Checking Account 

Opening a business account will separate you from your LLC and protect your valuables and make taxes and accounting easier. In addition to the account, you should obtain a business credit card. Having a card for solely your LLC will categorize and separate business expenses for tax purposes. 

You can also improve your credit score, so if you need a business loan, you have a good reputation to consider. You can also give multiple budgets to employees with separate cards under one account. To open a business checking account, you will need your LLC Certificate of Organization (or a copy) alongside the operating agreement, the LLC EIN, a written Resolution to Open a Bank Account, and a driver’s license.

Hire a Business Accountant and Obtain Business Insurance

Having a business accountant on your payroll will help make bookkeeping and payroll easier. Not only that, but this staff will help you not overpay on taxes and avoid penalties and fines. Overall, your business will run more effectively. 

Being adequately insured manages risks for your LLC and helps you focus on your growing business without liabilities preoccupying you.

Create a Business Website, Submit a Press Release, and Fund

Creating a business website legitimizes your organization and brings in more potential customers, meaning more revenue for your LLC.

You could submit a press release, an easy way to promote your business and get more publicity and brand presence. Additionally, it increases your search engine optimization (SEO). A press release is a one-time cost but gives your LLC long-term benefits.

All of your members or managers should fund the LLC, making an initial investment. Most of the time, they write a check into the LLC bank account, but they could contribute property or other services.

How to Keep Your LLC Compliant in Idaho

To have an Idaho LLC business, consider the business permits and licenses of the state. Some owners obtain a business license before investing and forming their LLCs. Other companies require a professional license, such as daycares, appraisers, or salons. 

Your LLC must comply with federal, state, and local government regulations. These vary from state to state, so it’s advisable to read them carefully to get a license that works for your needs.

Additionally, when you hire employees, you have to confirm that they can work in the United States. You must report employees as new hires to Idaho and provide workers’ compensation. To keep your LLC compliant, remember to withhold employee taxes and print out workplace compliance posters, so everyone working is aware.

Tax Filing Requirements for LLCs in Idaho

To fulfill the tax filing requirements for LLCs in Idaho, the IRS must be aware of the nature of your business. If you’re selling a physical product, you’ll be liable to Idaho sales taxes and must obtain a seller’s permit. 

Furthermore, you can collect sales tax on taxable sales. As for Idaho employer taxes, you must register for Unemployment Insurance Tax through the Idaho Department of Labor and sign withholding tax information through the Idaho State Tax Commission.

Federal LLC tax requirements state that you must report income via a specific form, either 1065 or 1040, and submit an annual report online. The annual report is due on the anniversary month when you formed your business.

A few other general guidelines to consider is that a single-member LLC will be taxed as a sole proprietorship. Multi-member LLCs will be taxed as a partnership, but you can adjust these protocols to a C or S corporation. The main difference is that the profits and losses are passed to the member’s federal income tax returns based on the percentage of ownership. Consider speaking with an accountant to confirm you have the best tax option for your LLC.

Frequently Asked Questions

The following section will address a few common inquiries regarding LLCs in Idaho.

How long does it take to register an LLC in Idaho?

Registering an LLC in Idaho can take seven to ten business days when you start the process online. You can pay extra to have your LLC filed in one day. If you opt to go through the mail, the process can take up to three weeks.

What tax structure should I choose for an LLC in Idaho?

They’ll inform you of the different tax classification options when you receive your EIN. Most LLCs opt for a default tax status. You can reduce your federal tax obligation by choosing the S corporation status. Nonetheless, as stated previously, you can verify with a professional if this is the right choice for your LLC.

Should you hire an LLC formation service in Idaho?

Forming an LLC is a fundamental process that you can do yourself without too much hassle. To summarize, you need to visit the Secretary of State’s website, confirm your business name is available, submit the Articles of Organization, and pay the state filing fee.

In some states, it’s easier to form an LLC. You could likely stumble across terminology or steps that aren’t familiar. You want to be sure you do this process right since you’re taking a massive step into your future. A formation service allows you to get guidance and assurance through this process without spending the astronomical amount to hire an attorney, whose services can go all the way up to $1,500.

Formation services simplify the formation process, walking you through and answering any questions. Furthermore, representatives provide alerts when reports are due. Their prices are a fraction of the attorney’s cost, varying from free to $300. Some offer premium add-ons in addition to the state fees. Formation services make it simple to form an LLC.

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Filed under: Idaho Business Guides